Daily Market Commentary 3rd October 2023

US and European equity markets continued the weakness of September trading lower. US and European bond yields resumed their upward rise, while manufacturing PMI data is in a state of freefall. PMI data in Europe was extremely weak, with the apparent de-industrialisation spreading from Germany to the rest of the EU. Manufacturing in Germany is contracting sharply, and this is recognised in the PMI numbers. The rise in US Bond Yields continues to defy the narrative, that markets have reached ‘peak inflation’ and ‘peak interest rates’. The US Dollar is supported by the rising bond yields, with the EUR falling back below 1.0500, while the Yen is fast approaching 150!

Commodity currencies are suffering the rising reserve, with the AUD plunging to 0.6360, while the NZD staggered to trade 0.5950. Australian Manufacturing PMI data revealed a contraction in manufacturing, as was the case in Japan, despite a more bullish Tankan report. Local markets are now heavily focused on today’s RBA rate decision. inflation continues to rise but the RBA Governor would surely not dare to challenge her political masters?